Exhibit 99.1
VALERO MERGER QUESTIONS - STOCK OPTIONS
Q 1. What happens to my stock options when Valero merges with UDS?
At the Closing Date of the merger, it will be deemed a
Change-in-Control ("CIC") for the purposes of UDS stock options. The
following changes to your options will result:
|X| All UDS options outstanding on the date of the CIC will become
fully vested and exercisable as options to purchase Valero common
stock.
|X| The number of Valero Stock Options will equal the number of UDS
Stock Options multiplied by the Exchange Ratio rounded to the
nearest whole share.1
|X| The Valero Stock Option will have a price per share (rounded to
the nearest one-hundredth of a cent) equal to the per share
exercise price of the UDS Stock Option divided by the Exchange
Ratio.
The Exchange Ratio =
[$27.50 + (0.614 x Valero Average Closing Price2)]
divided by
Valero Average Closing Price2
Illustration:
Assume the Valero Average Closing Price is $55, and that you have
100 UDS Stock Options outstanding with an Exercise Price of
$30.125 per option:
[$27.50 + (0.614 x $55)] divided by $55 = Exchange Ratio
[$27.50 + $33.77] divided by $55 = Exchange Ratio
[$61.27] divided by $55 = 1.114 Exchange Ratio
Options
UDS Options Multiply by Exchange Fractional Valero Rounded Valero Options
Ratio Options
- ------------------------ ------------------------- ---------------------- -------------------------
100 1.114 111.4 111
Exercise Price
UDS Exercise Price Divide by Exchange Ratio Valero Exercise Price Rounded Valero Exercise
Price
- ------------------------ ------------------------- ---------------------- -------------------------
$30.125 1.114 $27.0422 $27.04
Q 2. What impact does retirement have on my stock options?
If you retire3 before the CIC:
|X| stock options originally issued by Ultramar Diamond Shamrock
continue to be exercisable for the shorter of 5 years after
retirement or the remaining time to the option's expiration date;
stock options that are not vested at the time of retirement are
forfeited;
|X| stock options originally issued by Diamond Shamrock continue to
be exercisable for the shorter of 2 years after retirement or the
remaining time to the option's expiration date;
|X| stock options originally issued by Ultramar continue to be
exercisable for the shorter of 5 years after retirement or the
remaining time to the option's expiration date
|X| stock options originally issued by Total continue to be
exercisable for the shorter of 2 years after retirement or the
remaining time to the option's expiration date.
If you retire3 after the CIC:
|X| stock options originally issued by Ultramar Diamond Shamrock
continue to be exercisable for the shorter of 5 years after
retirement or the remaining time to the option's expiration date;
|X| stock options originally issued by Diamond Shamrock continue to
be exercisable for the shorter of 2 years after retirement or the
remaining time to the option's expiration date;
|X| stock options originally issued by Ultramar continue to be
exercisable for the shorter of 5 years after retirement or the
remaining time to the option's expiration date;
|X| stock options originally issued by Total continue to be
exercisable for the shorter of 2 years after retirement or the
remaining time to the option's expiration date.
Q 3. How do I exercise my stock options before the CIC? After the CIC?
To exercise your options before the CIC, you must continue to use
Merrill Lynch. If you have not previously set up your account with
Merrill Lynch, please contact Ken Drayden (210-592-4455), Carol Puga
(210-592-4034), or David Rico (210-592-4896). Information on exercising
stock options after the CIC will be provided at a later date.
Q 4. How do I know if I have any stock options outstanding?
We will be sending a report to all employees with outstanding options
in the near future. If you have any questions, please contact Ken
Drayden (210-592-4455), Carol Puga (210-592-4034), or David Rico
(210-592-4896). After the CIC, you will be provided with a report
regarding the conversion of your UDS stock options to Valero stock
options (see Q 1 above).
Q 5. How do I know if my stock options were originally issued by Ultramar,
Diamond Shamrock, Total, or Ultramar Diamond Shamrock?
We will include a legend on the report that will be sent to you (see Q
4).
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1 Since former Total Petroleum employees hold incentive stock options, the
conversion of your options may differ in order to preserve incentive stock
option treatment.
2 The Valero Average Closing Price means the average of the daily last sale
prices of Valero Common Stock as reported on the NYSE (as reported in the Wall
Street Journal) for the ten consecutive full trading days in which such shares
are traded on the NYSE ending at the close of trading on the third business day
prior to the Closing Date.
3 Retire means an employee's (a) early retirement (retirement from active
employment with the Company or a Subsidiary in accordance with the early
retirement provisions of a pension plan maintained by the Company or such
Subsidiary) or (b) normal retirement (retirement from active employment with the
Company or a Subsidiary in accordance with the normal retirement provisions of a
pension plan maintained by the Company or such Subsidiary).